Tuesday June 23, 2015

Sam Harlan, Head of Engineering &
Consulting

The Connect America Fund (CAF) proposal
(submitted by several groups including NTCA) is for Rate of
Return Carriers which are mostly the Tier 3 with some Tier
2 providers currently receiving voice-only high cost
support. There will be two options a carrier can take when
planning out their future:

Stay with the current cost model but it would be modified to
fund broadband only and would see a decreasing pool fund.

Cost model in which a company could receive guaranteed support
for a 10-year period but the funding would be based on a formula
with some limits to per subscriber support. Some language
points to 10:1 to 100% in the 10 year period.

There are proposed longer terms. This would be in the form
of a bid arrangement where multiple competitors could receive
support.

This could give Tier 3 providers an opportunity to serve areas
currently served by Tier 1 and 2 providers. Some of
these larger providers are in harvest mode and really do not want
to invest their capital in Rural America. Especially if the
investment requires a 10 Mbps downstream and 1 Mbps upstream to a
very large percentage, if not 100% of the subscribers depending on
the FCC guidelines. In many cases, the larger carriers may
choose to continue to do nothing in rural America. This will
leave the rural areas unserved or underserved. The Digital
Divide will continue to grow. This should make for an
interesting last half of the year with both challenges and
opportunities. Be mindful of nearby communities, especially
with some small to medium sized businesses. There may be
opportunities available to those who respond quick.

To learn more about the Connect America Fund and CHR's
Engineering Services, contact Sam Harlan at sam.harlan@chrsolutions.com
or 806.722.7762